14/05/2009 - 00:00

Asia Iron set to match Gindalbie

14/05/2009 - 00:00


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THE development of the Mid West region as an iron ore province has received a major boost after approvals advanced two significant projects.

THE development of the Mid West region as an iron ore province has received a major boost after approvals advanced two significant projects.

Treasurer Wayne Swan's conditional approval for Gindalbie Metal's $162 million funding deal with Chinese steel manufacturer, Ansteel, captured the headlines.

Asia Iron Holdings, by contrast, has quietly progressed its Extension Hill magnetite project, which is likely to be just as large as Gindalbie's Karara project.

Asia Iron last week reached a native title agreement with the Naaguja group, giving it permission to build a 278-kilometre pipeline from its mine to Geraldton for the transport of ore, water and gas.

The Hong-Kong registered Asia Iron is developing Extension Hill as feed for a China-based pellet plant in a 50:50 joint venture with Shougang Group.

Asia Iron chief executive Bill Mackenzie said Extension Hill remained on track for construction to commence next year, with magnetite production expected to be at least five million tonnes per year by 2011.

"We're just quietly getting on with all the necessary bits and pieces to develop and build the project," Mr Mackenzie said.

"We would certainly like to be in construction next year.

"We have federal and state environmental approvals for the project, and that's for the mining of the ore, the processing of the ore on site, the transportation of the ore and the export of the ore; so all aspects of the project are approved."

Mr Mackenzie said he expected Extension Hill to have a comparable economic impact to Karara.

"Our project will be of a similar size and nature to Gindalbie's, we've got a higher grade deposit so we can produce more from less if you like," he said.

"Gindalbie were quoting 1,500 [workers] during construction and 500 [workers] during operation. We would certainly be similar numbers."

The ore slurry pipeline will be the first of its type to be constructed in Western Australia, while similar technology is in use in Tasmania and South Australia.

"It's very low energy use, very low water use, no noise, no dust and it's a buried pipeline so you can't see it," Mr Mackenzie said. "Environmentally it's very benign."

The recent approval allows Ansteel to lift its stake in Gindalbie from 12.6 per cent to 36.3 per cent through a $162 million share placement.

As part of the approval, the companies must use the proposed Oakajee port to export iron ore product from the Karara mine when it becomes available.

Mr Swan also said Ansteel must not alter a 50:50 ownership structure for its pellet plant in China's Liaoning Province, part of the Karara joint venture, without seeking prior approval from the Australian government.

The deal is also subject to final approval from the Chinese government, expected within six weeks.


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